Q.Rent outstanding for the current year, given as an adjustment, should be:
(A) Added to Rent in the P&L Account and shown as a Current Asset
(B) Deducted from Rent in the P&L Account and shown as a Current Liability
(C) Added to Rent in the P&L Account and shown as a Current Liability
(D) Ignored, since it has not yet been paid

Outstanding rent is an expense incurred but unpaid, so it is added to the expense (understated in the Trial Balance) and shown as a liability owed.

Apply the 'owe more → add + liability' rule for outstanding expenses.

Outstanding Rent represents an expense already incurred (the benefit of occupying the premises has been consumed) but not yet paid by year end. The Trial Balance's Rent figure therefore UNDERSTATES the true expense, so the outstanding amount is added to it in the P&L Account, and since the business owes this amount, it is shown as a Current Liability in the Balance Sheet.

Option-by-option analysis:

• (A) Incorrect — this describes the treatment of Accrued Income, not an outstanding expense.
• (B) Incorrect — this describes the treatment of a Prepaid Expense, the opposite adjustment.
• (C) Correct — this is exactly the double effect of an outstanding expense.
• (D) Incorrect — an incurred-but-unpaid expense must always be recognised, never ignored.